Kavanagh, William Dudley v State of Tasmania
[1999] TASSC 79
•9 August 1999
[1999] TASSC 79
CITATION: Kavanagh v State of Tasmania [1999] TASSC 79
PARTIES: KAVANAGH, William Dudley
v
TASMANIA, State of
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 1800/1994
DELIVERED ON: 9 August 1999
DELIVERED AT: Hobart
HEARING DATES: 15 - 18 June 1999
JUDGMENT OF: Wright J
CATCHWORDS:
Employment Law - The contract of service and rights, duties and liabilities as between employer and employee - Duration and termination of employment - Generally - Legislation affecting - Deed of release - Whether deed enforceable - Equitable fraud - Unconscionability.
Commercial Bank of Australia Ltd v Amadio (1982 - 1983) 151 CLR 447, considered.
Tasmanian State Service Act 1984 (Tas), ss38, 47, 49, 50 and 51.
Aust Dig Employment Law [11]
REPRESENTATION:
Counsel:
Plaintiff: In Person
Defendant: P Turner
Solicitors:
Plaintiff: In Person
Defendant: Director of Public Prosecutions
Judgment Number: [1999] TASSC 79
Number of Paragraphs: 25
Serial No 79/1999
File No 1800/1994
WILLIAM DUDLEY KAVANAGH v STATE OF TASMANIA
REASONS FOR JUDGMENT WRIGHT J
9 August 1999
For many years prior to 1988, the plaintiff had been employed as an architect in the Housing Department. On 3 February 1988, the plaintiff and the then Minister for Public Administration on behalf of the Crown, entered into a contract of employment which commenced on 15 February 1988 and was expressed to terminate on 14 February 1993. The contract was executed under the enabling provisions of the Tasmanian State Service Act 1984, s38. The plaintiff's position provided for in the contract was that of General Manager, Development, in the Tasmanian Housing Department, Tasmanian State Service Position No 290264. The position description provided by the Crown detailed the plaintiff's duties as follows:
"Control and direct the operations of the Development Division, comprising Planning, Land Development, Design, Construction and the supporting Clerical/Administrative functions. Implement and monitor the Department's capital works program. Accept responsibility for planning future developments, direct and co-ordinate research on design, methods and materials. Authorise tenders and contracts. Act as a member of the management Committee. May be required to deputise for the Director during his absence."
The plaintiff's commencing salary was $49,182 per annum and the contract provided that thereafter he was to be paid a salary equivalent to Class 21 of the Clerical and Administrative Officers' Award under the Industrial Relations Act 1984, together with an expenses of office allowance of $500 per annum. The contract also provided that the provisions of the State Employees Long Service Leave Act 1950 and its Regulations, and the Retirement Benefits Act 1982 and the Tasmanian State Service Regulations 1985 and the General Conditions of Service Principal Award should apply to the plaintiff's position during the currency of the contract.
By cl 7 it was provided that the Crown may terminate the agreement at any time and in such event, the plaintiff would be "entitled to be appointed to a position as a permanent employee of the State Service, not lower in classification and salary than that which he held immediately before he became a contract employee". The contract also contained provisions as to the plaintiff's entitlement to terminate the agreement upon three months' notice and the Crown's obligation to give six months' notice prior to the termination date of any intention on its part to either renew or not renew the contract. Clause 7 appears to have been formulated on the assumption that the contract of service which, on its face, purports to be a "standard agreement for internal appointees", will apply only in the case of an existing permanent member of the State public service whose status is to be varied temporarily to that of a contract employee, with the expected consequence that, upon termination of the contractual period, such employee may well seek to resume with the public service without loss of seniority or diminution of salary or entitlements which continued service as a public servant would have entitled him to if he had not been placed on contract. A similar statutory scheme is acknowledged in the Tasmanian State Service Act 1984, s38(9) in the case of contract employees whose contract of service has not been renewed. In either case, however, the contract employee who reverts to the status of permanent employee with the State Service, may be declared "surplus to requirements" by the Head of Agency by whom he is employed (s47), and then, unless he is redeployed, with his consent, to another Agency, he may be placed on the Unattached List provided for in the Act, s51. If he is not then redeployed within the State Service within a period of 12 months, he may be called upon to resign and, if he declines to do so, he may be dismissed (see ss49(5)(b) and 50).
In or about January 1990, the Crown disbanded the Development Division of the Tasmanian Housing Department and created a new branch entitled "Building Works (Hobart)" in the Department of Construction. A new position of General Manager, Building Works (Hobart) was also created and it was proposed that this position would carry a salary equivalent to Level 3 in the then proposed Senior Executive Service ("SES"). This level of remuneration involved a higher salary than the plaintiff's contract position at the level of Class 21 in the Clerical and Administrative Officers' Award. Pending establishment of the SES, the former Director of Housing, Mr Sproule, who had been appointed the Secretary of the Department of Construction, requested the plaintiff to undertake the duties of the position of General Manager, Building Works (Hobart). The duties pertaining to this position were substantially different from those of the General Manager, Development, in the former Housing Department.
Due to a restructuring of the Public Service which was then taking place, there was some delay in the formal creation of the SES and for some six months after the plaintiff assumed the new title and its concomitant responsibilities, no formal contract was entered into. The plaintiff was not in fact formally appointed to the SES at any relevant time.
In or about July 1990, the branch of Building Works (Hobart) was disbanded in the course of a further restructuring process which was occurring in the Public Service at the time and, on 22 June 1990, Mr Sproule informed the plaintiff that effective from 12 July 1990, his duties would consist of those applicable to the position of General Manager, (Asset Management) in the Department of Construction. This was a new position and involved substantially changed duties and an increase in responsibility on the plaintiff's part. The plaintiff requested that his appointment be confirmed in writing and that he be formally appointed to the position of Level 3, SES. The Crown declined to make a fresh appointment in the way requested by the plaintiff, indicating (inter alia) that in its opinion, the plaintiff was still employed pursuant to the contract dated 3 February 1988 and that that contract governed the ongoing relationship between the plaintiff and the Crown. The view was also expressed that in view of the plaintiff's salary level provided for in that contract, too great a differential existed for him to be appointed immediately to a Level 3 position in the SES.
The plaintiff made it clear that he did not accept the Crown's contentions in this respect and took the understandable view, notwithstanding his dissatisfaction with the way things were developing, that for him to be able to continue to draw his salary, he would need to continue working, discharging the duties and responsibilities which were expected and required of him by the Secretary. The issues which had arisen as to the plaintiff's continuing status and entitlements continued unresolved until December 1990 when the plaintiff agreed with the Secretary upon the terms of a position description relating to the General Manager, Building and Construction and Maintenance, it was also agreed that due to the evolution of that position since it was first mooted, it should be classed as SES Level 4. The plaintiff claims that the Secretary was acting as authorised delegate of the Crown in respect of these negotiations and had the power and authority and, in fact, concluded an enforceable agreement with the plaintiff in the terms just mentioned.
It is difficult to accept the plaintiff's contention in this respect, however, because it is plain from the evidence presented at the trial that the Secretary at no time purported to enter into a new formal contractual relationship with the plaintiff. It is plain from the evidence that both the plaintiff and the Secretary were aware that the terms provisionally agreed between them required ratification and endorsement by the Premier or the Secretary of the Premier's Department before they could become binding upon the Crown. It may also be inferred, although it was not stated, that in such an event, a formal contractual document would have been prepared requiring execution or written acknowledgement by both parties.
In April 1991, the Secretary advised the plaintiff that classification for his new position was to be SES Level 3. The plaintiff felt that this was an inadequate recognition of the level of responsibility attaching to the position. However, after further negotiation, the plaintiff indicated to the Secretary that he would be prepared to accept a Level 3 position on certain conditions. The Secretary accepted these and sought confirmation from the Secretary of the Department of Premier and Cabinet. The Secretary of the Department of Premier and Cabinet indicated that the plaintiff could not be translated directly into an SES Level 3 position and in July 1991, the plaintiff wrote to the Secretary indicating that he took the view that his contract of employment with the Crown had been repudiated.
Later that month whilst the plaintiff was on leave, he was advised that he had been relieved of all duties, whether under his original contractual position or otherwise, and he was allocated a special assignment which continued until the end of September 1991 The plaintiff was advised that the position of General Manager, Building and Construction and Maintenance, would be advertised and that he may apply for that position.
When the first restructuring of the relevant departments had taken place, the Government had implemented a voluntary redundancy program which was subsequently terminated and superseded by a new and less favourable program. Having regard to the way things had developed, the plaintiff expressed interest in taking a redundancy, but he was informed that the terms of the original redundancy program would be no longer available to him. The Secretary of the Department indicated that any claim he might have for entitlements on leaving the Public Service would be based strictly upon the legal entitlement which he had pursuant to the original contract of February 1988. The plaintiff thereupon formulated and made a claim based upon the loss of those contractual entitlements and, on 16 October 1991, the Secretary advised the plaintiff that having had Crown Law advice upon his claim, the same would, subject to calculations yet to be performed, be accepted. The principle of the claim was not disputed. It was therefore proposed that the plaintiff should immediately take leave, which would be notionally backdated to 14 October, being the date to which the plaintiff had made his calculations as to his financial entitlement for the purpose of the proposed settlement.
On 30 October, however, the plaintiff was recalled to his office and was advised by the Secretary that an agreement in the terms proposed was unacceptable to the Crown. This change in attitude was plainly attributable to revised legal advice that the Secretary had received and it is plain from the evidence that the Secretary himself was extremely embarrassed by this volte-face. The plaintiff was informed that he had the choice of taking the 1991 redundancy package or, failing his election to do so, his contract of February 1988, which the Crown alleged was still on foot, would be terminated by the Crown in reliance upon cl 7 thereof. As the Crown was unable to offer a new appointment in the terms provided for in cl 7, it was suggested that the plaintiff's entitlements would thereupon be limited to 12 months on the Public Service Unattached List. These proposals were put in writing on 1 November in a letter to the plaintiff signed by the Secretary. The plaintiff was requested to make a decision on the proposals within seven days. The plaintiff indicated to the Secretary on 30 October that he would return to the office on 4 November, which he did, and the Secretary indicated that he would have difficulty placing the plaintiff in any currently available position within the Department. The voluminous correspondence and memoranda prepared by the plaintiff, the Secretary, and other departmental employees relating to the relevant meetings and negotiations and, in particular, evidencing the plaintiff's proposals, objections and complaints to the expressed attitude of the Secretary, are to be found in exhibits P65 - P76 inclusive. Between 4 November and 6 November, when he left his office due to ill health late in the day, the plaintiff attended at his office, but performed no duties. On 6 November 1991, the plaintiff signed a memorandum addressed to the Secretary, Department of Construction, in the following terms:
"statement of intent - redundancy/early retirement
* I confirm my acceptance of the offer of redundancy made by the Head of Agency on 6 November 1991 on the terms and conditions specified in the Package for Redundancy and Early Retirement in the Tasmanian Public Sector.
I agree that my employment will be terminated from the close of business on 8th November 1991
On the conditions of acceptance of the redundancy package I forego my rights under the TSS Act 1984 to have my name registered on the Unattached List and to exercise appeal rights relating to redeployment. I understand this has the effect of terminating my employment within the Tasmanian State Service."
The plaintiff subsequently executed a deed of release on 11 November 1991 terminating his employment with the Crown on and from 8 November 1991 in consideration of a payment by the Crown to the plaintiff of $55,208.30. In 1994, the plaintiff instituted the present proceedings in the Supreme Court against the State of Tasmania alleging (inter alia) that the plaintiff and the Crown had concluded an agreement as to the plaintiff's future employment on 16 October 1991 which had been fundamentally breached by repudiation by the Crown, thus entitling the plaintiff to damages.
In its defence, the Crown denied that there had been any agreement entered into with the plaintiff on 16 October 1991 and it also set up the deed of release dated 11 November 1991, saying that the plaintiff's execution thereof and his receipt and acceptance of the sum of $55,208.30 referred to therein had the effect of fully discharging any rights which the plaintiff might otherwise have against the defendant arising out of the plaintiff's employment or its termination, including all rights which the plaintiff had or might otherwise have had to all or any of the sums claimed in the statement of claim.
In his reply, the plaintiff admitted receipt of the sum of $55,208.30 and execution of the deed, but he claimed that the deed did not, on its true construction, apply to any period of service which he undertook for the Crown prior to 4 November 1991. He contended that the deed was limited in its operation to the period of employment of the plaintiff by the Crown which commenced on 4 November 1991 and which was terminated by the deed effective as from 8 November 1991. Alternatively, the plaintiff said that the deed was not a true accord and satisfaction and was unenforceable by reason of misrepresentations made to him by the Crown as to the legal status of his employment up to and including 6 November 1991. The plaintiff alleged that the representations were false and were made negligently or with reckless disregard as to their truth or that they were made deceitfully. As a further alternative, the plaintiff claimed that the deed is void and, as a final alternative, he seeks an order rescinding the deed or for an order that the Crown is estopped from relying on it.
The plaintiff, who has a law degree, but has never held a practising certificate, acted on his own behalf throughout these proceedings. He handled his case with skill and competence and despite a few minor procedural irregularities, he dealt with all relevant issues and presented his evidence in a clear and lucid manner. He did not waste time on irrelevancies and marshalled his evidence and presented both his oral and documentary evidence in a helpful way.
There are many issues in this case regarding the effect and purpose of dealings between the plaintiff and the Secretary of the relevant department and it is by no means clear, without fully analysing those dealings, whether or not the plaintiff's original contract was terminated and a new contract of employment substituted therefor at some point during the protracted and tortuous restructuring processes which were going on in the State Service. I also think it fair to say that whatever conclusion might be reached as to these matters, the plaintiff received fairly shabby treatment from the Crown in the way he was dealt with during the relevant period. In saying this, I do not wish to be critical of Mr Sproule, The Secretary of the Housing Department and the Department of Construction at all relevant times, who obviously did his best to accommodate the plaintiff's reasonable wishes and to retain his services. He regarded the plaintiff as a valuable employee and both he and the plaintiff appear to have dealt with each other with mutual courtesy at all times. The plaintiff's frustrations should, rather, be attributed to those exercising a more senior level of control over the disposition and remuneration of staff as part of the administrative services of the Government. It seems to me, however, that it is more appropriate and convenient to deal with the issues which arise in respect of the execution of the deed of release before passing on to these matters.
It is plain, I think, that the plaintiff was reluctant to execute the deed as and when he did and that it represented a settlement of his claims at a sum considerably less than the sum which he was anticipating up to and including the time that he went on leave in early November 1991. It is plain, also, from answers given in cross-examination, that the plaintiff has become a little obsessional about what he sees as his mistreatment at the hands of the Government. His unhappiness with the outcome prompted him to institute the present proceedings only after mulling over the situation in the months following the cessation of his employment. This should be borne in mind when considering the plaintiff's somewhat surprising claim that the redundancy payment of $55,208.30 related only to his engagement between 4 and 8 November 1991.
I must say at the outset that notwithstanding the careful chronology of events presented both by Mr Kavanagh himself and Mr Sproule, who was called as a defence witness, regarding the events on and from 16 October 1991, I can see absolutely no basis for concluding that there was a discrete period of employment of the plaintiff by the Crown between 4 and 8 November to which the deed of release can properly be confined. The plaintiff had been continuously employed by the Crown in one role or another since 22 September 1965. That employment was governed by various contractual and other arrangements from time to time during the relevant period. The relevant parts of the deed of release were in the following terms:
"whereas the Releasor -
A Is currently employed by the Crown
B Has agreed to the termination of his/her employment in return for the Redundancy payment as detailed in this Deed
now this deed witnesseth
1 The Crown undertakes -
(a)to make a redundancy payment of $55,208.30 ('the redundancy payment') within 28 days of the date of cessation to the Releasor in respect of the cessation of employment from close of business 8 November 1991 …
(b)… (not relevant)
2 The Releasor -
(a)acknowledges that his/her employment with the Crown has been terminated with effect from close of business on 8 November 1991.
(b)subject to sub-clauses 1(b) and 2(e), accepts the redundancy payment in full accord and satisfaction of all suits, actions, causes of action and other claims or demands whatsoever arising out of his/her employment and the termination of that employment.
(c)… (not relevant).
(d)… (not relevant).
(e)does not hereby release or discharge the Crown from any liability which has arisen or may arise in connection with the said employment to -
(i)pay workers' compensation or pay damages for personal injuries at common law; or
(ii)make good the underpayment of wages, salaries or other entitlements."
Leaving aside for the moment the effect of par2(e)(ii), it is plain, in my opinion, that not only did the plaintiff realise at the time that he executed the deed and accepted the payment that it was intended to apply to, and constitute a release in respect of, all periods of his employment with the Crown prior to 11 November 1991, but a proper construction of the deed of release also leads to the same result. In short, subject only to the reservations contained in cl 2(e), the plaintiff has effectively and comprehensively released the Crown from all claims or demands which he may have in respect of his employment of whatever kind or nature at any time. Clause 2(e)(ii) excepts from the operation of the release "underpayment of wages, salaries or other entitlements". In my opinion, within the context of the release document and the circumstances leading up to its execution and implementation, this provision does not leave the door open for the plaintiff to successfully pursue his present claim. In my opinion, cl 2(e)(ii) must be interpreted as applying to cases or circumstances in which some erroneous mathematical or formularistic calculation has been applied to assess the payment to an employee of past salary instalments which can subsequently be shown by reference to plainly applicable and objectively identifiable criteria to be wrong. Such is not the basis of the plaintiff's present action and pars4.0 and 4.1 of the statement of claim appear to recognise this. The claim made under pars4.0 and 4.1 is limited to arrears of salary for 15 and 16 October 1991, during which period he says he was unpaid for time at work. Even so, it seems to me to be that the plaintiff's action in subsequently executing the release in the terms which he did on 11 November 1991, knowing of the fact that he had worked on those two days preparatory to his resignation without having been paid, constituted an effective accord and satisfaction of any claim based upon these facts. There was no mistaken belief or assumption on his part that he had been paid at appropriate rates for that period or that he was induced to believe that a specific amount had been incorporated in the settlement figure for those two days which, upon recalculation, has been shown to be false.
I can deal equally shortly with the plaintiff's allegation that the deed is unenforceable by reason of misrepresentations made by the Crown to the plaintiff as to the status of his employment up to and including 6 November 1991. It is clear enough from the evidence that the Crown maintained throughout that the plaintiff was at all relevant times still employed pursuant to the terms of the contract entered into in February 1988. It is also plain that from time to time, the Crown received legal advice upon these and other matters pertaining to the plaintiff's employment and it is equally obvious that that advice was, on occasions, inconsistent and contradictory. However, it is also absolutely clear that the plaintiff at no relevant time accepted the Crown's contentions and was not persuaded, either by representations made by Mr Sproule or by legal officers employed by the Crown, that their views were correct and his were wrong. I have not yet determined these issues, but for present purposes, I think it is unnecessary to do so. I am prepared for present purposes to assume that the Crown's contentions, where they conflicted with the plaintiff's, were erroneous. The simple fact remains, however, that the plaintiff never accepted and never acted upon the Crown's version of their contractual relationship. Right up to the end, he vigorously and, indeed, eloquently, maintained that his entitlements to remuneration exceeded those which the Crown was prepared to offer. His decision to execute the deed and accept the moneys provided for therein was not induced by any representations made by the Crown. On this basis alone, the plaintiff's first ground for challenging the binding effect of the deed must fail, but it is also appropriate to observe that there is no material upon which a finding could properly be made that any representations made by the Crown or its servants or agents to the plaintiff, were made negligently or with a reckless disregard as to their truth or that they were made deceitfully. Those allegations simply do not stand scrutiny in the context of the evidence.
As already mentioned, the plaintiff raises issues which he claims entitle him to equitable relief against the effect of the deed, in par3.3 of the reply. In specific terms, that paragraph relies on the alleged falsity of representations made by the Crown and negligence, reckless disregard as to truth and deceit in respect of those matters that I have already discussed, but Mr Turner, counsel for the Crown, suggested, correctly, in my opinion, that the plaintiff's real complaint was that he is the victim of an unconscionable transaction and that his contention that he was entitled to relief from the effect of that transaction was based on grounds of equitable fraud. Mr Turner suggested that the only categories of equitable fraud which might be said to apply in the circumstances of the present case were illegitimate economic pressure, misrepresentation, undue influence, or an unconscionable bargain. He convincingly demonstrated that none of these categories of misconduct could be properly attributed to the Crown or its servants or agents.
In the first place, there was no illegitimate economic pressure brought to bear by the Crown upon the plaintiff. There was no threat to disadvantage him in any unlawful way or any threat to deprive him of whatever rights or entitlements he might otherwise have, if he did not accept the Crown's offer. The negotiations were always within the control of the plaintiff and I am unable to find that he was in any way oppressed by the Crown's actions, notwithstanding that those actions in some respects may have been open to criticism on other grounds. The issue of misrepresentation has already been largely dealt with. There is certainly no evidence that the plaintiff placed any reliance upon any alleged misrepresentation made by the Crown. He has never accepted the Crown's position in relation to his employment and he has always considered it to be wrong. He cannot therefore successfully claim to be the victim of a misrepresentation in electing to terminate his employment in the circumstances in which he did. The plaintiff was not in a relationship from which undue influence can be presumed and, on the evidence, there can be no inference that he was subjected to undue pressure. As I have already observed, he always had the choice as to whether or not he would accept the Crown's proposal as to his redundancy. Mr Turner submitted that the amount which the plaintiff received was manifestly more than he would have received as an unattached employee but, whether or not this is so, it is plain that there was adequate consideration for the termination which the deed brought about.
Finally, it must be observed that the plaintiff was under no special disability which would entitle a court to set aside the transaction as an unconscionable bargain, see Commercial Bank of Australia Ltd v Amadio (1982 - 1983) 151 CLR 447, per Deane J at 474. There is no reason to conclude that the Crown enjoyed some position of special advantage over the plaintiff, there was no threat to discontinue salary payments to him if he were to persist in his claims, and there was no threat to otherwise disadvantage him. In any event, it is not enough merely to show that one party held some position of special advantage over the other because it must also be shown, if a plea of this kind is to succeed, that the power of the dominant party was in fact exploited to the disadvantage of the other party. The plaintiff at all times chose to act upon his own perception of his rights and entitlements and did not seek independent legal advice. I am quite unable to discern any equitable grounds upon which the effect or operation of the deed of release may be resisted. In my opinion, these observations are sufficient to dispose of this case. There will be judgment for the defendant.
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